In assessing the military child care system from an employer perspective, DoD must consider not only whom the system is serving, but also the costs to DoD of providing the benefits and the value that DoD receives in return.
Cost of DoD-Sponsored Child Care
Singer and Davis (2007) estimate that DoD spends about $480 million annually on military child care. Given the wide variety of child care options used by military families and the fac-tors that are related to child care use, it is worthwhile to consider the cost drivers of the military child care system. To do this we draw on information from Zellman and Gates (2002). That study relied on the results of a survey of 69 military installations to construct estimates of the cost of different child care options. The survey was conducted in the fall of 1999 and asked installations to provide information from fiscal year 1998. The survey data were analyzed to assess the total cost of different child care options and to assess the pattern of subsidies from DoD to military parents.
In discussing the results of the survey below, we adjust the dollar figures using the Con-sumer Price Index to reflect 2007 purchasing power. This method is likely to understate the actual increase in the cost of different child care options.1 However, this detailed cost survey is the most current source of information on the costs of operating the child care system, and the data provide a useful starting point for discussion.
Cost
In analyzing the cost of military child care, Zellman and Gates (2002) considered the amount of money that DoD and parents together spend on different types of child care. The authors used information from the cost survey to construct estimates by care type (CDC, FCC, and contractor-provided center care) and by child age category.2 The analysis did not account for facility construction costs. In the case of both CDC care and contractor-provided center care,
1 In 2003, the Wall Street Journal noted that the cost of child care had been increasing at a faster clip than most other consumer costs—about 5 percent per year. This increase may be due, in part, to increases in the average quality of care. See Wall Street Journal, n.d.
2 MCCA (as well as most state licensing and NAEYC accreditation criteria) stipulates specific staff-child ratios by age group. As a result, child age is a key driver of the cost of center-based child care. The age categories are defined as follows:
infant—0–11 months; pretoddler—12–23 months; toddler—24–35 months; preschooler—36 months–five years; school age—five years and up.
36 Options for Improving the Military Child Care System
those costs are borne by DoD. A 1999 GAO study of U.S. Air Force child care estimated these facility costs at about 10 percent of the total. For FCC, the care is typically provided in military housing (typically DoD or government-leased housing), and facility costs are not accounted for directly.
Figure 4.1 summarizes the cost of DoD child care options as estimated by Zellman and Gates (2002).3
In general, the cost of CDC care is substantially higher than the cost of FCC or the cost (i.e., the price charged) to DoD and parents for child care provided to DoD by civilian contrac-tors. The difference is greatest for children under two years of age (infants and pretoddlers), and less so for older children. In fact, the cost of care for preschool-aged and school-aged children provided in DoD centers is sometimes lower than the price charged to DoD and parents for contractor-provided care. FCC is less costly to provide than CDC care; the difference is esti-mated to be over $9,000 per year for each infant, and about $1,600 per year for each school-aged child. DoD has expanded support for FCC in order to increase both the capacity and the quality of FCC. As such, it is likely that the direct and indirect costs of FCC have increased relative to the costs of CDC care. Nevertheless, FCC likely remains a far less costly option for providing care to the youngest children.
Figure 4.1
Estimated Annual Cost of Child Care, by Child Age Group
RAND OP217-4.1
NOTE: Dollar amounts have been revised to reflect 2007 dollars.
3 These average costs reflect straight, unadjusted averages for a sample of installations that were included in the study. The sampling strategy and analytical methods are described in Zellman and Gates (2002). Installations were stratified in terms of whether they were located in “rich” (i.e. high-cost-of-living) areas and remote areas, and the distribution of responding installations across the four categories was similar to the distribution of all installations. The authors show that CDC costs are higher at installations that are located in high-cost-of-living areas, and they are higher at installations that have CDCs with a smaller average size. The authors also found that FCC costs were higher in areas with higher costs of living.
Military Child Care from the Perspective of DoD as an Employer 37
Subsidy
A vast majority of the child care resources spent by DoD is devoted to care provided in CDCs.
Although parents do pay fees to the CDCs, these fees cover less than half of the cost of operat-ing CDCs.4 Parent fees for CDC care are set at the installation level with guidance from the services and DoD based on MCCA. The fee schedules vary by family income. Families with higher incomes pay higher fees.5 Parent fees do not vary by child age, even though the cost of providing care varies substantially by child age, as shown in Figure 4.1. Zellman and Gates (2002) used information on average income Category III parent fees along with the cost esti-mates generated from a 1999 cost survey to estimate the fraction of total CDC costs covered by parent fees. We have updated the estimates contained in that report to reflect the value of the subsidy in 2007 dollars. To do this, we assume that the subsidy rate by child age has remained constant over time and multiply that rate by the estimated cost of providing child care in 2007 dollars. Figure 4.2 displays the estimated value of the subsidy by child age group.
Figure 4.2 illustrates that the DoD subsidy is worth nearly $11,000 per year to parents of infants who are in income Category III. That value declines by child age to about $1,400 per year for income Category III parents of school-aged children. For each child age level, the value of the subsidy would be higher for lower income category parents (Categories I and II) and lower for high-income category parents. Indeed, a high-income parent of an older child in the CDCs may be paying DoD more than the actual cost of caring for his or her child.
In 1999, few installations (14 out of 69) were providing any direct fee subsidies for FCC.
Of those few, many were providing subsidies only for infant care in FCC homes. The maxi-mum subsidy provided was $90 per week for each child. In 2007 dollars, that would amount to a subsidy of $114 per week, or nearly $5,000 per year per child. Most installations that did provide subsidies provided far less than this amount.
We did not examine the cost of care provided to school-aged children, although we have reason to believe that the subsidies for these children are not large.
Contributions of the Military Child Care System to Outcomes of Interest to DoD
A crucial question for DoD to consider is whether the system as it is currently structured is providing DoD with value in terms of improved recruiting, readiness, and retention. As discussed in Chapter Two, private-sector employers typically provide child care benefits to employees for several key reasons: as a recruiting, retention, and productivity promoting tool;
to assist employees in meeting the special demands of employment, such as extended hours and
4 MCCA requires that each dollar in fees spent by parents be matched with one dollar of support from appropriated funds, which sets the subsidy floor at 50 percent overall. Typically, installations pick up costs associated with building mainte-nance, purchase of high-dollar equipment, and janitorial services, increasing the overall subsidy rate.
5 For the 2006–2007 school year, there were six income categories. Category I: $0–$28,000; Category II: $28,001–$34,000;
Category III: $34,001–44,000; Category IV: $44,001–55,000; Category V: $55,001–70,000; Category VI: over $70,000.
The income category is determined by total family income. In 1998, DoD had only five income categories. Income Category III (used to calculate subsidy rates) included families with total family income between $34,000 and $44,000 (in FY 1998 dollars).
38 Options for Improving the Military Child Care System
Figure 4.2
Estimated Value of the CDC Subsidy Paid by DoD per Child, by Child Age Group for Income Category III Parents
RAND OP217-4.2
10,000
8,000
6,000
4,000
2,000 12,000
School aged Pretoddler
Infant Preschool
aged Toddler
0
Dollars
SOURCE: Zellman and Gates, 2002.
NOTE: Dollar amounts have been revised to reflect 2007 dollars.
shift work; and to assist employees in balancing the demands of their jobs with the demands of their personal lives.
As mentioned in the introduction to this paper, evaluations of the military child care system since the implementation of MCCA have tended to focus either on measuring the number of spaces provided by the system or on assessing the quality of care provided. To our knowledge, there has been no systematic evaluation of the relationship between military child care and readiness, retention, or recruiting. In this section, we discuss what is known about the extent to which the military child care system is contributing to these DoD goals.
Readiness and Productivity
The 2004 RAND child care survey by Moini, Zellman, and Gates (2006) asked military fami-lies whether child care issues had prevented a parent from reporting for military duty either fol-lowing the birth of a child or after the most recent relocation. Such problems were an issue for over one-third (36 percent) of dual-military families and over 10 percent of single parents, but only for fewer than 1 percent of families with a civilian spouse. The survey also asked whether child care issues forced a parent to miss work or be late to work in the past month. Over half (51 percent) of military mothers and 22 percent of military fathers reported being late to work in the last month because of child care issues. Similarly, over two-thirds (37 percent) of mili-tary mothers and 7 percent of milimili-tary fathers reported having to miss work because of child care issues. Clearly, female military parents are carrying a greater child care burden and cover-ing for child care inadequacies more often than their male counterparts. This situation is mir-rored in the experiences of private-sector employees as well. These survey results suggest that child care issues have implications for the productivity of military members and that this is true even for families that are using DoD-sponsored child care options.
Military Child Care from the Perspective of DoD as an Employer 39
Absenteeism and readiness may be influenced by the flexibility of child care arrange-ments that families use. One measure of how well current child care options are meeting the needs of military families is the degree to which families using a particular type of care need to use more than one arrangement in order to care for their children in the context of work.
Moini, Zellman, and Gates (2006) found that about 20 percent of families surveyed reported using more than one arrangement in the past week. For a vast majority of these families, the secondary arrangement was an informal one (such as a friend, nanny, or relative), and it was used for fewer than ten hours per week. The authors examined the fraction of families that used a secondary arrangement by family type and by the type of primary care used; the data reveal that the patterns differ dramatically by family type. Dual-military families are the most likely to use a secondary arrangement (nearly half reported doing so). However, whereas nearly all dual-military families that use FCC or informal care options for preschool-aged children reported using a second option, only 15 percent of CDC users did. Overall, primary reliance on informal child care options (such as relatives, nannies, or friends) is more likely to require parents to find supplementary child care. In contrast, few two-parent families that use a CDC have to supplement that care with another form of child care. In that sense, the CDCs appear to be meeting the needs of the families that are using that type of care, although we do not know the extent to which some families choose not to use a CDC because it would not meet their needs as a result of their work schedules.
Retention
Given the challenges of juggling child care and military work, DoD may be concerned about the effect of child care on retention. Although there is no direct evidence on this subject because DoD does not systematically track who uses military child care, the 2004 RAND child care survey did ask families to report on the likelihood that a military member would leave the military because of child care issues. The survey found that families with preschool-aged chil-dren were much more likely to report such a propensity. Among families with preschool-aged children, dual-military families were 30 percentage points more likely to report a propensity to leave the military than single military parents because of child care issues. Surprisingly, the analysis of survey results also revealed that, controlling for other characteristics such as family type, CDC users were also more likely to report a propensity to leave the military because of child care issues. This latter finding is troublesome from an employer perspective and may reflect the inflexibility of this type of care. DoD is devoting a substantial portion of child care funds to the CDCs, yet appears to be reaping few benefits.
Recruitment
We are aware of no studies that have examined the implications of military child care for recruiting. Furthermore, we were not able to identify any military recruiting efforts that spe-cifically highlight the military child care system.
Who Receives the DoD Child Care Subsidy (and Are They Aware of It)?
Parents of young children who are in low-income categories and use the CDC receive child care subsidies worth over $10,000 per year. Other CDC families also receive significant sub-sidies, although the value of the DoD subsidy is lower for parents in higher income categories and for parents of older children. Families using other DoD care, such as FCC, receive little to no subsidy.
40 Options for Improving the Military Child Care System
Applying the survey results discussed above concerning the number of military parents to these subsidy data, we can see how limited these child care subsidies actually are. About 33 percent of military members have children under 12 years of age. Slightly more than half of the children under 12 are between the ages of 0 and 5. However, only about 16 percent of these parents use CDC care. This finding suggests that most military families with children do not receive any child care benefit from DoD, while those who use CDCs, particularly those who have infants being cared for in CDCs, receive a benefit equivalent to as much as one-third of their basic pay.
Among those who do receive a benefit from DoD, many are unaware of the subsidy since they do not know what it costs DoD to provide the care. The RAND 2004 child care demand survey indicates that many families of preschool-aged children would prefer to use a CDC. But it is unclear whether they in fact value CDC care at the full cost of providing that care. Parents using FCC may get a subsidy, depending on whether the installation at which they are located offers a subsidy for FCC. Typically, this subsidy is more visible to parents because they know what they would have to pay the provider without the subsidy. The new subsidy programs (Military Child Care in Your Neighborhood, etc.) are also more visible to parents.
The lack of visibility of the CDC subsidy poses a serious barrier to DoD’s benefiting from it in terms of recruitment and retention. The services are not unaware of this problem: the U.S.
Army, for example, has produced a brochure that clearly states that “the Army covers much of the cost (of CDC care).” Given the size of the subsidy provided, lack of visibility is an issue worthy of serious consideration and possible adjustment. In focus groups conducted as part of our study on child care demand (see Moini, Zellman, and Gates, 2006), many participants expressed the belief that DoD was “making a profit” from CDC care. In other words, parents believe that they pay more for child care than it costs DoD to provide it. On a related point, several CDC users expressed the opinion that if they left the military, it would be easy for them to obtain similar quality child care for the same (or even a lower) price. In fact, it is quite dif-ficult to obtain high-quality child care in civilian centers, and when such care is available, it is much more expensive than the fees paid by military parents for CDC care.
Summary
The current military child care system focuses most resources on providing in-kind child care benefits through DoD-operated CDCs. The evidence presented in this chapter suggests that a strong emphasis on this one child care option is not effectively meeting the needs of DoD or military parents.
The total cost of CDC care is substantially higher than the cost of FCC or child care pro-vided to DoD by many private contractors. The differences are most significant when looking at care provided to children under two years of age. Of particular note is the cost difference between CDC care and FCC for infants and toddlers, which by our estimate exceeds $7,000 per child per year.
Military families that are fortunate enough to have access to a CDC receive a subsidy that is potentially worth over $10,000 per year per child (depending on the family’s income cat-egory and the child’s age), while families using other child care options receive little or no sub-sidy. Since many CDC users are completely unaware of the subsidy DoD is providing, DoD is
Military Child Care from the Perspective of DoD as an Employer 41
missing an important opportunity to further its goals of recruitment, readiness, and retention through the provision of this valuable subsidy.
Despite the resources being devoted to the CDCs, the CDCs are neither able to serve all military families that need care nor are they able to meet all the child care needs of the military families they serve. Many military families reported in RAND’s 2004 survey that child care issues have kept them from reporting to duty or have caused them to miss or be late to work in
Despite the resources being devoted to the CDCs, the CDCs are neither able to serve all military families that need care nor are they able to meet all the child care needs of the military families they serve. Many military families reported in RAND’s 2004 survey that child care issues have kept them from reporting to duty or have caused them to miss or be late to work in